In a significant financial relief move, the Internal Revenue Service (IRS) is set to distribute special payments of up to $1,400 to approximately one million taxpayers in the coming weeks. These funds will be directly deposited into eligible taxpayers’ bank accounts or sent via paper check through the mail.
The IRS is allocating around $2.4 billion to taxpayers who overlooked claiming a Recovery Rebate Credit on their 2021 tax returns. This situation affects those individuals who missed one of the COVID stimulus payments or did not receive the full amount they were entitled to. An internal audit by the IRS identified that many eligible taxpayers failed to claim this crucial credit.
IRS Commissioner Danny Werfel stated, “Analyzing our internal data revealed that one million taxpayers neglected to claim this complex credit despite being eligible.” This announcement has created a buzz as affected taxpayers can now look forward to receiving unexpected cash payments.
Wondering if you might receive a check? Unfortunately, the chances are slim for many, as the IRS noted that most taxpayers who qualify for these federal stimulus payments have likely already received them. The special payments are targeted at those who filed a 2021 tax return but either left the Recovery Rebate Credit data field blank or incorrectly stated it as $0 despite their eligibility.
Here’s how it works: Eligible taxpayers do not need to take any action. Payments will automatically be issued this month and should arrive either via direct deposit or check by late January 2025. These payments will be sent to the bank account noted on the taxpayer’s 2023 return or to the address the IRS has on file.
The payments will vary based on individual circumstances, with a maximum potential amount of $1,400 per person. The IRS has provided detailed information online regarding eligibility and the calculation of these payments.
Eligible taxpayers will also receive separate letters from the IRS notifying them of their special payment. However, if you have not yet filed your 2021 tax return, you may still qualify for the payment. It’s vital to file a return and claim the Recovery Rebate Credit by the April 15, 2025, deadline, even if your income was minimal or non-existent, per IRS guidelines.
To provide context, there have been three rounds of COVID stimulus payments, totaling $814 billion distributed to households affected by the pandemic. The amounts received were based on income, tax filing status, and the number of children or qualifying dependents. Initially, in March 2020, eligible individuals received up to $1,200 per income tax filer and $500 per child under the CARES Act. Subsequently, in December 2020, payments of up to $600 per filer and $600 per child were approved under the Consolidated Appropriations Act. Finally, in March 2021, the American Rescue Plan Act provided up to $1,400 per filer and child.
